Editor's Note:

The market's rally continues to look tired. The intraday gains faded into the closing bell. I'm still crossing my fingers that we'll see a decent pull back so we can launch new bullish positions on the decline.

-James

Current Portfolio:


CALL Play Updates

CH Robinson Worldwide Inc. - CHRW - close: 78.46 change: +0.39

Stop Loss: 74.45
Target(s): 74.90, 79.00
Current Option Gain/Loss: +230.4%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
12/14 update: CHRW is getting closer to our final target. Shares hit $78.71 this afternoon. Our final target is $79.00. More aggressive traders could aim for $80. Bear in mind that CHRW remains short-term overbought and due for some profit taking. The stock did show some relative strength today with a +0.49% gain compared to a decline in the transportation index. We will raise our stop loss to $74.45. I am not suggesting new positions at this time. I urge more conservative traders to strongly consider an early exit now.

Current Position:
Long the January $75.00 calls (CHRW1122A75) Entry @ $1.15

12/14: New stop loss @ 74.45
12/11: New stop loss @ 72.90
12/01: New Stop loss @ 71.90
12/01: First target hit @ $74.90 Exit all December calls: $0.95 (+111.1%)
12/01: First target hit, take profits on January calls: $ $2.00 (+73.9%)
11/27: New stop @ 70.75, new first target at $74.90

Entry on November 22nd at $72.44
Earnings Date 02/03/11
Average Daily Volume = 1.1 million
Listed on November 18th, 2010


Cummins Inc. - CMI - close: 108.29 change: +1.60

Stop Loss: 98.40
Target(s): 108.25 114.00
Current Option Gain/Loss: Unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see trigger

Comments:
12/14 update: Positive analyst comments on CMI pushed the stock to a +1.5% gain and a new all-time high. I urge readers to not chase this move. CMI is overbought here. We will raise our buy-the-dip trigger to $102.50 and raise our stop loss to $98.40.

We want to start with small positions! Consider only buying half your normal position size. Just in case the correction pulls CMI toward the 50-dma we want to have some cash on the sidelines to double down near the 50-dma.

Trigger @ $102.50 <-- New Trigger

- Suggested Position -
Buy the 2011 January $105 calls (CMI1122A105)

- or -

Buy the 2011 March $110 calls (CMI1119C110)

Entry on December xxth at $ xx.xx
Earnings Date 02/02/11 (unconfirmed)
Average Daily Volume = 1.8 million
Listed on December 11th, 2010


CSX Corp. - CSX - close: 63.62 change: -0.16

Stop Loss: 59.75
Target(s): 67.00, 69.50
Current Option Gain/Loss: -12.0% and - 8.4%
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Comments:
12/14 update: The Dow Jones Railroad index consolidated sideways most of the session but broke down under short-term support late this afternoon. CSX delivered a similar move just on a smaller scale. Meanwhile Bloomberg had an article discussing the rising put volume on CSX. The author is suggesting that investors are buying lots of puts on CSX with the expectation that CSX will decline sharply following its earnings report (due out in January). For now the overall trend in CSX is bullish but I wouldn't be surprised to see a dip at $62.00. As a matter of fact I would use a dip into the $62.00-61.00 area as another entry point to buy calls.

- Current Positions - (We only have a small position open)

Buy the 2011 January $65 calls (CSX1122A65) Entry @ $1.75

- or -

Buy the 2011 February $65 calls (CSX1119B65) Entry @ $2.49

12/13: CSX opened at $64.39
12/11: New Entry Point Strategy. Buy half now.
12/11: New targets: 67.00, 69.50
12/02: New trigger @ 62.50.
12/01: New trigger @ 62.25, New stop @ 59.90, New targets.

Entry on December 13th at $64.39
Earnings Date 01/18/11 (unconfirmed)
Average Daily Volume = 5.9 million
Listed on November 23rd, 2010


CenturyLink, Inc. - CTL - close: 45.92 change: +0.70

Stop Loss: 43.75
Target(s): 44.90, 47.25
Current Option Gain/Loss: +550.0%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
12/14 update: Once again CTL is showing relative strength. The rally seems to be accelerating. Shares added +1.5% to close at new two-year highs (again). I am raising our stop loss to $43.75 since broken resistance near $44.00 should offer some support. I'm not suggesting new positions at this time. CTL is short-term overbought and due for some profit taking. Our final target to exit is $47.25.
NOTE: I would strongly consider an early exit on any move near $47.00! More conservative traders will want to consider an early exit now.

FYI: Investors should know that CTL is currently involved with a $10.6 billion stock-swap merger with Qwest Communications (Q). The merger isn't supposed to be completed until the first half of 2011. The trend for both stocks is up and naturally looks very similar following the M&A announcement.

Current Position:
Long the 2011 January $45.00 calls (CTL1122A45) Entry @ 0.20

12/14: New stop loss @ 43.75
12/13: First Target Hit @ $44.90, option @ $0.85 (+325%)
12/01: Adjusted secondary target to $49.00

Entry on November 29th at $42x55
Earnings Date 02/22/11
Average Daily Volume = 3.0 million
Listed on November 27th, 2010


Express Scripts - ESRX - close: 54.86 change: +0.54

Stop Loss: 49.65
Target(s): 53.95, 57.25
Current Option Gain/Loss: +50.0%
Time Frame: 5 to 6 weeks
New Positions: Yes, see below

Comments:
12/14 update: ESRX outperformed the major market averages but shares remain inside the $55-54 trading range. I still don't see any changes from my weekend comments. I'm still warning readers to be ready for a correction back towards $52.00. If you're looking for a new entry point I would prefer to initiate positions on a dip or a bounce near $53-52.

We currently only have half a position open.

Current Position:
Long the 2011 January $52.50 calls (ESRX1122A52.5) Entry @ $2.10

12/07: Exit the December calls. option @ $2.01 (+64.7%)
12/01: First Target Hit @ $53.95. Dec's @ $2.20 (+80.3%). Jan's @ $3.10 (+47.6%)

Entry on November 18th at $51.81
Earnings Date 02/24/11
Average Daily Volume = 4.3 million
Listed on November 17th, 2010


Fastenal Co. - FAST - close: 58.99 change: +0.11

Stop Loss: 53.75
Target(s): 59.75, 62.50
Current Option Gain/Loss: Unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see trigger

Comments:
12/14 update: UBS initiated coverage on FAST with a "neutral" rating. This news didn't do much for the stock. Shares spent the day drifting sideways. We are still waiting for a little correction to buy the dip. The plan is to buy calls at $56.00. Conservative traders could wait for a dip closer to $55 or $54 before launching positions. If triggered our first target is $59.75.

FYI: FAST announced a special, one-time cash dividend of 42-cents on November 18th and all of the option strikes have been adjusted for this 42-cent dividend.

Trigger @ 56.00

Suggested Positions:
Buy the 2011 January $54.58 calls (FAST1122A54.58)

- or -

Buy the 2011 February $59.58 calls (FAST1119B59.58)

Entry on December xxth at $ xx.xx
Earnings Date 01/19/11 (unconfirmed)
Average Daily Volume = 880 thousand
Listed on December 8th, 2010


FedEx Corp. - FDX - close: 93.33 change: -0.98

Stop Loss: 87.75
Target(s): 94.75, 99.00
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Comments:
12/14 update: FDX lost about 1% on Tuesday. Shares have been trading in the $96-92 range for a couple of weeks now. Odds are FDX will remain in this range tomorrow as investors wait for the company's earnings report on Thursday morning. I am expecting FDX To see some volatility following the report. Just in case the stock spikes lower toward $90.00 I am moving our trigger to buy calls down to $90.25. We'll re-evaluate our entry point again once we see how the market reacts to FDX's earnings. Wall Street is expecting a profit of $1.31 a share.

Suggested Position: TRIGGER @ $90.25 <-- new trigger

Buy the 2011 January $90.00 call (FDX1122A90) current ask $4.85

- or

Buy the 2011 April $95 call (FDX1116D95) current ask $5.00

Entry on December xxth at $ xx.xx
Earnings Date 12/16/10 (confirmed)
Average Daily Volume = 2.1 million
Listed on November 29th, 2010


Goldman Sachs - GS - close: 167.33 change: -2.15

Stop Loss: 157.45
Target(s): 169.75, 177.00
Current Option Gain/Loss: Unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see trigger

Comments:
12/14 update: We should not be surprised to see some profit taking in GS. I've been warning readers that GS was short-term overbought and the $170-171 area was resistance. Let's just hope the pull back continues. We're still waiting for the correction with a trigger to buy calls at $163.00.

Trigger @ 163.00

Suggested Positions:
Buy the 2011 January $170 calls (GS1122A170)

- or -

Buy the 2011 April $175 calls (GS1116D175)

Entry on December xxth at $ xx.xx
Earnings Date 01/18/11 (unconfirmed)
Average Daily Volume = 7.2 million
Listed on December 2nd, 2010


W.W. Grainger Inc. - GWW - close: 134.83 change: +1.06

Stop Loss: 124.75
Target(s): 129.90, 138.50
Current Option Gain/Loss: +152.0%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
12/14 update: UBS initiated coverage on GWW with a "neutral". This news failed to halt the stock from hitting new highs as shares gained another +0.79%. I am raising our stop loss to $127.25 since the $128.00 level should be support. I am not suggesting new bullish positions at current levels. Our final target remains $138.50.

FYI: The stock could see a little short squeeze since the most recent data listed short interest at more than 5% of the 58.5 million share float (which isn't very big as far as floats go). FYI: The Point & Figure chart is bullish with a $140 target.

Current Position:
Long the 2011 January $130 calls (GWW1122A130) Entry @ $2.50

12/14: New stop loss @ 127.25
12/02: First target hit @ 129.90, option @ $4.10 (+64%)
12/02: New stop loss @ 124.75, New final target at $138.50

Entry on November 24th at $126.75
Earnings Date 01/25/11 (unconfirmed)
Average Daily Volume = 567 thousand
Listed on November 22nd, 2010


Juniper Networks - JNPR - close: 35.75 change: -0.41

Stop Loss: 33.75
Target(s): 37.40, 39.85
Current Option Gain/Loss: Unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see trigger

Comments:
12/14 update: Networking stocks are starting to see some profit taking. Yesterday's action and today's decline definitely looks like a short-term failed rally/bearish reversal. I'm expecting a pull back toward short-term support near $35.00. We have a trigger to buy calls at $35.20. More conservative traders could wait to buy calls on a dip near $34.00.

Trigger to buy the dip @ $35.20

- Suggested Position -
Buy the 2011 January $35.00 calls (JNPR1122A35)

- or -

Buy the 2011 April $37.00 calls (JNPR1116D37)

Entry on December xxth at $ xx.xx
Earnings Date 01/25/11 (unconfirmed)
Average Daily Volume = 5.5 million
Listed on December 11th, 2010


Nike Inc. - NKE - close: 89.28 change: +0.05

Stop Loss: 83.90
Target(s): 89.50, 94.50
Current Option Gain/Loss: +92.4%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
12/14 update: Traders bought the early morning dip in NKE and shares managed to squeeze our another gain. There is no change from my prior comments. More conservative traders may want to consider an early exit now. Or you may want to consider a higher stop loss. I'm considering raising our stop closer to $85 or $86. Officially the newsletter's final exit is the $94.50 mark. I am not suggesting new bullish positions at this time.

(Second position) Current Position:
Long the January $85.00 CALLS (symbol:NKE1122A85) Entry @ $2.78

12/13/10 Target Hit @ $89.64 (gap higher), option @ $5.51 (+98.2%)
12/13/10 New stop loss $83.90
12/11/10 New stop loss $83.49
12/07/10 Exit the December calls, option @ $2.25 (+95.6%)
12/01/10 New stop loss @ 82.45
11/30/10 Readers may want to exit December options early for a gain
11/30/10 Entry on January calls @ $2.78
11/29/10 Buy the bounce from $84.00
11/24/10 Target hit @ 86.75, Dec. option @ $2.60 (+126%)

Entry on November 11th at $83.00
Earnings Date 12/21/10
Average Daily Volume = 2.3 million
Listed on November 6th, 2010


Oceaneering International - OII - close: 73.82 change: +1.02

Stop Loss: 67.75
Target(s): 74.80, 79.75
Current Option Gain/Loss: Unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see trigger

Comments:
12/14 update: The OSX oil service index underperformed the OIX oil index on Tuesday. Yet OII displayed some relative strength this morning. The stock spiked over $75.00 only to see its gains fade this afternoon. It looks like another short-term failed rally pattern. The recent volatility could be signs of a more significant top. Readers may want to scale back on their position size to limit their risk. Currently our plan is unchanged. We want to buy calls on a dip at $70.25.

Trigger to buy @ $70.25

Suggested Position: Buy the 2011 January $75 calls (OII1122A75)

- or -

Suggested Position: Buy the 2011 April $75 calls (OII1116D75)

Entry on December xxth at $ xx.xx
Earnings Date 02/17/11 (unconfirmed)
Average Daily Volume = 584 thousand
Listed on December 4th, 2010


Transocean Ltd. - RIG - close: 72.80 change: +0.33

Stop Loss: 66.25
Target(s): 72.50, 78.25
Current Option Gain/Loss: +52.5%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
12/14 update: It was a quiet session for RIG. Shares saw another failed rally near $74.00 this morning. There is no change from my prior comments. More conservative traders may want to consider raising their stop loss. I am not suggesting new positions at current levels. Our final target is $78.25.

- Current Position -
Long the 2011 January $70.00 calls (RIG1122A70) Entry @ $2.95

12/11/10 New target 78.25, new stop loss $66.25
12/03/10 Target hit @ $72.50, option @ $4.95 (+67.7%)

Entry on November 30th at $68.18
Earnings Date 02/24/11 (unconfirmed)
Average Daily Volume = 6.3 million
Listed on November 29th, 2010


Sherwin-Williams Co. - SHW - close: 79.38 change: +1.20

Stop Loss: 73.75
Target(s): 79.90
Current Option Gain/Loss: Unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see trigger

Comments:
12/14 update: The relative strength in SHW is great but it's frustrating when we're not in the stock yet. Shares are overbought with their December rally lifting shares more than five points without much of a dip. The $80.00 level has been resistance in the past. I would now expect SHW to rally into the $80.00-80.40 zone and then correct lower.

We want to buy calls on a correction at $76.10.

Trigger @ $76.10

Suggested Positions:

Buy the 2011 January $75.00 calls (SHW1122A75)

- or -

Buy the 2011 March $80.00 calls (SHW1119C80)

Entry on December xxth at $ xx.xx
Earnings Date 01/26/11 (unconfirmed)
Average Daily Volume = 675 thousand
Listed on December 9th, 2010


Union Pacific - UNP - close: 91.57 change: -0.61

Stop Loss: 87.90
Target(s): 96.25, 99.75
Current Option Gain/Loss: - 11.8%
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Comments:
12/14 update: UNP saw a small sell-off in the last two hours of trading. Shares hit $90.93 at its low. I would expect a dip toward $90.00 or its rising 50-dma near $89.00. Wait for the dip close to $90.00 or wait for the bounce before considering new bullish call positions. If you do initiate positions I would buy the February calls. More conservative traders might want to consider a tighter stop loss.

- Current position -
Suggested Position:
Buy the 2011 January $95 calls (UNP1122A95) Entry @ $1.52

Entry on November 30th at $89.83
Earnings Date 01/20/11
Average Daily Volume = 2.9 million
Listed on November 20th, 2010


United Parcel Service - UPS - close: 72.60 change: -0.17

Stop Loss: 66.85
Target(s): 74.75, 78.50
Current Option Gain/Loss: Unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see below

Comments:
12/14 update: UPS dipped toward $72.00 late this afternoon but managed to pare its losses. Shares of UPS might churn sideways tomorrow as investors wait to hear the earnings news from rival FedEx (FDX) on Thursday morning. We can probably expect some volatility in UPS following FDX's report.

UPS should have support near broken resistance at $70.00. Currently our plan is to buy calls on a dip at $70.25 but I might reconsider if UPS bounces near $71.00 again.

Trigger @ 70.25

Suggested Position:
Buy the 2011 January $70.00 call (UPS1122A70)

- or -

Buy the 2011 April $75.00 call (UPS1116D75)

Entry on December xxth at $ xx.xx
Earnings Date 02/01/10 (unconfirmed)
Average Daily Volume = 3.9 million
Listed on December 6th, 2010


United Technology Corp. - UTX - close: 78.85 change: +0.70

Stop Loss: 73.90
Target(s): 81.50, 84.75
Current Option Gain/Loss: Unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see trigger

Comments:
12/14 update: UTX was showing some strength today. Traders bought the morning gap lower but the rally stalled at $79.00. There is no change from my prior comments. Currently our plan is to buy calls on a dip at $77.10. Cautious traders could wait for a pull back closer to $76.00 or even $75.00.
FYI: The Point & Figure chart is bullish with a $91 target for UTX.

Trigger to buy calls @ $77.10

Suggested Position: Buy the 2011 January $80 calls (UTX1122A80)

- or -

Suggested Position: Buy the 2011 February $80 calls (UTX1119B80)

Entry on December xxth at $ xx.xx
Earnings Date 01/26/11 (unconfirmed)
Average Daily Volume = 3.2 million
Listed on December 4th, 2010


Vulcan Materials Co. - VMC - close: 47.37 change: +2.59

Stop Loss: 39.95
Target(s): 47.75
Current Option Gain/Loss: Unopened
Time Frame: 6 to 8 weeks
New Positions: Yes, see trigger

Comments:
12/14 update: Yuck! This melt up higher without any corrections is frustrating. Obviously the +5.7% rally in VMC is bullish. Shares were one of the best performers today and volume was very big on the move, which is another positive signal. Yet we don't want to buy options here. The $47.50 level should offer some short-term resistance. I'm suggesting readers wait for a correction.

We will raise our trigger to buy calls on the dip to $43.75.

Trigger @ $43.75 <-- New trigger

Suggested Position: Buy the 2011 January $45 calls (VMC1122A45)

- or -

Buy the 2011 February $45 calls (VMC1119B45)

Entry on December xxth at $ xx.xx
Earnings Date 02/07/11 (unconfirmed)
Average Daily Volume = 1.5 million
Listed on December 13th, 2010


Cimarex Energy Co. - XEC - close: 86.34 change: +0.34

Stop Loss: 79.85
Target(s): 87.40, 89.90
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see below

Comments:
12/14 update: XEC continues to drift sideways in the $85-87 range. We are waiting for a correction lower. Our plan is to buy calls on a dip at $84.00. Cautious traders could wait for a dip closer to $82 instead.

Trigger @ 84.00

Suggested Position:
Buy the 2011 January $85 calls (XEC1122A85)

- or - Buy the 2011

Entry on December xxth at $ xx.xx
Earnings Date 02/17/11 (unconfirmed)
Average Daily Volume = 907 thousand
Listed on December 1st, 2010


PUT Play Updates

Expedia Inc. - EXPE - close: 25.57 change: -0.57

Stop Loss: 27.75
Target(s): 25.10, 24.25
Current Option Gain/Loss: +41.6%
Time Frame: 2 to 3 weeks
New Positions: No

Comments:
12/14 update: The sell-off continues in EXPE. The stock dipped toward the $25.50 level and bounced. Yet the bounce rolled over under the $26.00 level. Our first target to take profits is at $25.10.

Current Position: Buy the 2011 January $25 Put (EXPE1122M25) Entry @ $0.60

Entry on December 8th at $26.88
Earnings Date 02/10/11 (unconfirmed)
Average Daily Volume = 2.5 million
Listed on December 7th, 2010


CLOSED BULLISH PLAYS

Humana Inc. - HUM - close: 56.03 change: -0.51

Stop Loss: 54.40
Target(s): 59.75, 64.00
Current Option Gain/Loss: -34.2%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
12/14 update: The HMO healthcare index managed to eke out a gain but HUM underperformed its peers. I remain very concerned about this stock and today's close under the simple 50-dma is bearish. I am suggesting we go ahead and cut our losses in HUM now. We can re-evaluate positions if we see shares close over $58.00 or retest support in the $52.50-50.00 zone.

Closed Position:
Long the 2011 January $55 calls (HUM1122A55) Entry @ $3.80, exit @ $2.50 (-34.2%)

12/14/10 Exit Early, Option @ $2.50 (-34.2%)
12/08/10 New stop @ 54.40
11/22/10 New stop @ 53.75
11/22/10 New (2nd) target at $64.00

Chart:

Entry on November 18th at $55.05
Earnings Date 11/01/10 (confirmed)
Average Daily Volume = 2.1 million
Listed on October 16th, 2010